2018 Power Broker

Workers’ Compensation

Embracing Unique Solutions

Jason Allen
President
Worldwide Risk Management, Portland, Maine

AMK9, a global security firm operating in volatile regions such as Afghanistan and Iran, faced significant challenges with injuries.

The firm had a broker at the time but felt that broker wasn’t delivering the value the company expected. It cast its net and found Worldwide Risk Management’s Jason Allen.

“He used his resources to dramatically improve our loss history,” said risk manager Ralph Mylie. “I would say that he’s saved us millions of dollars.”

Part of that effort included working with the insurance carrier to connect the client with vendors with the right expertise.

One of the vendors Allen sourced uses sophisticated baseline imaging that can be compared against post-injury imaging to more accurately identify work causation.

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This was key, said Mylie, because a good chunk of the company’s losses had been coming from people that were probably not screened properly to begin with.

Partnering with that vendor, AMK9 gained a high level of confidence it was paying for legitimate claims, and costs began dropping rapidly.

“He goes 120 percent for his clients,” said the founder and chief scientific officer for the vendor. She said she has worked with several of Allen’s clients with similar issues managing soft tissue injuries.

Added another client with personnel deployed across the globe, “Jason absolutely understands what our company’s true needs are.”

Bespoke Solutions for Every Challenge

Matt Edelheit
Senior Vice President 
Lockton, Denver

Matt Edelheit thrives on problems that require complex solutions. Recently, Edelheit’s client, Valvoline Inc., spun off from its parent company, and separated legacy liabilities that were assigned to both companies. The vast majority of these claims were workers’ comp, some dating back to the early ’70s.

“I was hired to come in and do ERM,” said Mark Bures, Valvoline’s manager of enterprise risk management and insurance. “I had 15 years’ experience in ERM and zero in insurance.”

“Matt was an unbelievable resource in helping me understand it all,” Bures said. “I call him for everything, and he always takes the call.”

Working closely with all stakeholders, Edelheit’s team created a customized insurance program that reduced the client’s retentions, reduced their total cost of risk and removed more than $1.8M of historical losses that would have otherwise been collateralized.

For another client, a nationwide self-storage company that owns some of its facilities and manages others, Edelheit developed a unique program structure that allows smaller owners to take advantage of the company’s buying power to get better rates.

“I’m not aware of anyone doing what we did,” said the company’s risk management director. Edelheit recommended a safety shoe program for employees and reduced bending-related injuries by instituting a walk-to-open procedure for unit doors.

“We’ve dropped probably between 35 and 40 percent in claims costs and premiums.”

A Steadying Presence

Tim Keip
Senior Vice President
Marsh, Chicago

Any broker can do a good job when a client’s sailing in calm waters. But it takes a Power Broker® like Marsh’s Tim Keip to help steady the ship during storms.

Keip’s mettle was tested during a tricky renewal for a manufacturing client that had been acquired by a larger company and was merging risk management and insurance departments.

The client enlisted Keip’s help in steering the parent company to its carrier and developing a new program that played to both company’s strengths.

“It took tons of work” and some serious creativity, said the client, including carving out certain pieces of the program and applying different deductibles.

Another client was in the middle of a significant marketing effort when tragedy struck, and the company was faced with a catastrophic claim. Half of the potential carriers dropped the company like a hot potato.

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But Keip kicked into overdrive to keep the claim from derailing the renewal, organizing on-site inspections and safety presentations, making a case for carriers that necessary steps had been taken to minimize the risk of a repeat catastrophe.

He made a convincing case that while bad things do happen, the company had taken responsible measures to improve safety results, the client said.

When all was said and done, the program benefited from significant improvements, including a unique feature that allowed the client to apply appropriate retentions to different aspects of its operations.

Building Dream Teams

Travis Boggert, CIC, CRM
Chief Sales Officer
HUB International, Tulsa, Okla.

Travis Biggert’s approach to client service is a little bit like solving puzzles: carefully select each piece until the whole program fits.

Biggert and his HUB team spent years interviewing and vetting occupational medicine physicians, attorneys, neurosurgery groups and orthopedic groups to build teams that best serve their clients.

“Our premium had almost doubled in a year,” said one client, a large retailer. “We had some claims that were dragging out.” Travis and his team “helped us refine our process,” he said. “Our premiums would have been half a million, but now they’re under $200,000. He’s really been a game changer for us.”

Mercy Regional EMS. owner and CEO Duke Dixon said Biggert came in and redesigned the company’s program from top to bottom. “At that point I was willing to try anything.

“Travis brought in some programs that restructured the way we do workers’ comp,” including pre-employment testing and a specialized musculoskeletal tool called Electrodiagnostic Functional Assessment.

“Our number of claims dropped practically overnight,” said Dixon. “And the claims we have now we know are legit.”

Biggert works exceptionally hard “to help insureds understand their loss patterns and develop strategies to reduce those losses,” said Mark Gruber, chief operating officer of Oklahoma’s state insurance fund, CompSource Mutual.

“Travis is probably the most proactive individual I’ve ever had the pleasure to work with.”

The Man with the Answers

Chad Hoxie
Assistant Vice President      
Alliant, San Diego

The CEO at San Diego-based PMS Janitorial was comfortable with her incumbent provider. But her son Phil Senescall, the company’s sales director, convinced her to take a meeting with his longtime friend, Chad Hoxie.

She was powerfully impressed, said Senescall, and Hoxie has been a game-changer for the company ever since.

“He’s great with giving us out-of-the-box ideas,” said Maria Butler, the company’s HR director.

Hoxie’s current work-in-progress is trying to expand the company’s medical provider network to include a cross-border health care group specializing in serving U.S. workers who would rather receive treatment in Mexico.

If he succeeds, it will build a higher level of trust with Hispanic employees who are injured on the job, said Butler.

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She adds that Hoxie’s customer service is off the charts. Perfect example: Late afternoon on the Friday before Christmas, an urgent question cropped up.

“I knew a lot of people were headed out early, but I was desperately trying to get an answer for my employee,” she said. “I had exhausted all my resources as far as calling my adjuster and my entire line of contacts.”

But she called Hoxie, and he called her right back and promised to find the answer she needed. Not only did he get the answer promptly, “but then offered to get me more information,” she said.

“Here I thought I was going to have to wait until the following week. I don’t know who he called, but he was able to get me an answer.”

Guiding Clients Toward Best in Class

Dennis Tierny
National Director
Marsh, New York

Marsh’s Dennis Tierney is the one you call when you need someone to take the 30,000-foot view and find ways to turn a good program into one that is truly best in class.

“Dennis came onto our account, and it was a breath of fresh air,” said Phil Scarano, director of risk finance management, Diageo North America Inc.

Scarano said Tierney has a gift for “making sure the best people and the best talent are touching your files.”

During an aggressive claims review, Tierney revamped the way the company accesses legal services, ensuring that a wider breadth of defense firms is considered. He also made the shift from in-house counsel to a panel of counselors.

Tierney, as National Director of Workers’ Comp Claims, is exceptional at helping clients understand how claims in one part of the country may be looked at differently than in other regions or jurisdictions.

That’s why for a distributor client, Tierney took the time to hand-pick the company’s team of resources, including attorneys in each jurisdiction.

“He was part of the interview process,” said the company’s risk and insurance manager.

“He was instrumental in helping us find the right fit, and helping us understand the jurisdictional nuances.”

“His leadership mantra is ‘you should always be measured by how you make the people around you better.’ It’s one of his strengths,” said Scarano.

Finalists:

Jeffrey Breskin
Director
Crystal & Company, Los Angeles

Christian Florence
ZOOM Co-Practice Leader
Beecher Carlson, Atlanta

Jessica Haas
Vice President, Claims Consulting Practice
Marsh, Morristown, N.J.

Carol Murphy
Managing Director and Casualty Growth Leader
Aon, Chicago

Ettie Schoor
Owner
PRISM Insurance Group
Cedarhurst, N.Y.

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]